Here at IBA we always try to learn from not just our own but others past mistakes. Here, Jon Brown at IBA decided to have a quick look at some memorable PR disasters of 2016 – and what we learned from them.
And the Olympic Gold Medal goes to ….
U.S. Olympic swimmer Ryan Lochte rocked the headlines at the Rio Olympics when he claimed he had been held at gun point during a robbery at a Rio gas station post his gold medal win. Video surveillance showed that Lochte and his team mates had in fact vandalized the gas station bathroom. Cue call for the media storm.
Lochte took five long days to put a crisis team in place and when he finally issued multiple apologies on national TV, these came across as insincere and, when supposedly giving the true account, the story continually changed.
LESSON: Not hanging around is essential in a PR crisis – you can’t just expect things to blow over. You take immediate action before the story builds its own momentum. The five days Lochte waited before hiring a professional allowed for further damage to his reputation which led to him being dropped by top sponsors Speedo and Polo Ralph Lauren.
LESSON: If you are apologizing, make one statement and stick to it – do not have different variants otherwise you invite speculation, uncertainty and the one that won’t go away – doubt of your sincerity.
What started off as Samsung’s answer to the iPhone ended up with the company losing $3.1 billion in profits after poor crisis management when the phones started to randomly combust. The lack of response from Samsung led to the U.S. Department of Transportation banning the phones from all U.S. airline flights and allowed for mainstream media and social media users to control the story as videos of new phones catching fire each day hit the headlines.
When Samsung finally sprang into action, it did so with yet another blunder. The company released a statement informing customers in Hong Kong that their phones had a different battery and therefore would not be impacted. However, the next day the statement was retracted as it turned out 500 phones in Hong Kong had already caught fire. Samsung eventually recalled all the phones and discontinued the model but not without serious reputational and financial damage for the brand.
So what can we learn from this PR fail?
LESSON: Don’t wait 40 days to publicly acknowledge a problem. Admit the problem immediately, then keep then media and your customers informed while trying to find a solution.
Just keep taking the pills?
When you’re called before the highest court in the land for raising the price of a lifesaving drug by 400% it’s best not to play the victim and announce “no one is more frustrated than me” about the crisis you’ve caused.
The price increase of the U.S. company Mylan Pharmaceutical’s drug EpiPen was brought to light through the power of social media, leading to 80,000 signatures on an online petition and more than 121,000 letters sent to congress. When forced to explain before the U.S. Congress, the company responded that it was due to a need to increase profits. However, the company conveniently left out the pay raise CEOs profited from – $2.5 million annually to $19 million over the course of the EpiPen price hike.
Mylan finally announced it would offer a generic version of the original EpiPen for half the price which left people questioning why it took so long for this solution to be offered.
LESSON: One of the key rules of crisis mitigation is to show that you are taking measures to fix the problem. Remember – when it comes to life and death people don’t mess around. You need to understand that their problem is actually your problem.
Many saw Mylan’s response as a quick fix and not a long-term remedy. Post PR blunder, the company has been hit with multiple lawsuits and a 70% decrease in share price.
See our example of how to respond in a crisis here.
At IBA, 2016 was happily crisis neutral and our clients are all looking seriously well positioned for the year ahead. Here’s a snapshot of just a few: we’ll be driving into the US for one company that just made a major company acquisition, new Private Equity funding is enabling another to springboard into new vertical markets, while a third is honing its cutting-edge technology for the burgeoning IoT market and the smart connected world.
It’s great to be on winning teams.